The good news is they're a "totally different organization to old IOOF". The bad news is they're a "totally different organization to old IOOF".
Appreciating this company is a difficult process.
We've had a Royal Commission into the Banking, Superannuation and Financial Services industry which required behavioral changes in these industries, a Covid shutdown period where the Government enabled the release of large amounts of personal superannuation funds to support a comfortable lifestyle while in lockdown and the transfer of ownership of two large Superannuation entities into a third to create the largest Superannuation company in Australia.
The days of charging fees as a % of assets and service fees to dead people has been replaced by reasonable fixed fees for the service required with the client required to be alive at all stages of the service. And all the time the clients must be advised of the costs incurred. So, all up, a bit of a kick in the guts to the old business model and quite a change for this new client sensitive organization. Next thing you know they'll be expecting Star and Crown Casino's to operate without a money laundering arm.
Large loans and capital raising were required to support this new larger business which now requires large numbers of advisors with a much more complete education. These numbers are hard to attract after many advisors left the industry because of the higher educational standards introduced. Remediation costs emanating from the banking enquiry have to be met as and when they are recognized and remain a little uncertain. Large expenditures were incurred to provide an up-to-date technology offering to clients and advisors to remain competitive. The full value of the synergies to be obtained as a result of this merger are still being realized.
A lot of balls have been thrown in the air and I'm hoping that this financial year, beginning with the Annual Report in early November will provide our first real look at a settled business where clarification of their future performance is clear. I remain hopeful.
IFL Price at posting:
$2.95 Sentiment: Hold Disclosure: Held
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